ACUTAAS — earnings call

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Prepared remarks

– AMI ORGANICS LIMITED · MR. BHAVIN SHAH – CHIEF FINANCIAL OFFICER –

MR. BHAVIN SHAH – CHIEF FINANCIAL OFFICER –

Moderator · Conference Operator

MR. KRISHAN PARWANI - JM FINANCIAL INSTITUTIONAL SECURITIES LIMITED

AMI ORGANICS LIMITED · MODERATOR:

May 02, 2025

Moderator · Conference Operator

Ladies and gentlemen, good day, and welcome to the Ami Organics Limited Q4 FY '25 Earnings Conference Call hosted by JM Financial Institutional Securities Limited.

As a reminder, all participant lines will be in the listen-only mode and there will be an opportunity for you to ask questions after the presentation concludes.

Should you need assistance during the conference call, please signal an operator by pressing star then zero on your touch-tone phone.

Please note that this conference is being recorded.

I now hand the conference over to Mr. Krishan Parwani.

Thank you, and over to you, sir.

Krishan Parwani

Yes.

Good afternoon, everyone, and thank you for joining us on Ami Organics Q4 and FY '25

AMI ORGANICS LIMITED · MODERATOR:

May 02, 2025 India is increasingly recognized as a viable alternative to China, a trend that is strategically positioned us to leverage.

On the policy front, pharmaceuticals are exempted from U.S. tariffs.

However, the U.S. government has initiated investigation into imports of pharmaceutical and semiconductors, which may lead to future tariff measures.

Given the multifaceted nature of these potential outcomes, we will refrain from speculations, but we will continue to watch the developments as we progress through 2025.

For battery chemicals, despite moderate demand for electric vehicles globally and delays in new battery cell capacity across the sector, we are observing a positive shift.

Manufacturers are actively diversifying supply chains away from China, a movement accelerated by U.S. tariff policy.

The transition presents significant opportunities, and we are well prepared to capitalize on this evolving landscape.

Moving on the semiconductor industry, while appetite for chips to power the data centers behind the artificial intelligence boom continues to thrive, demand for legacy semiconductors found in cars, industrial equipment and other devices have been subdued in recent months.

Our strategic initiatives in Korea, Japan and Taiwan are yielding encouraging results, and we are confident this market will play a pivotal role in our future growth.

Overall, we remain cautiously optimistic about demand even as a cloud of uncertainty continues to hover over the industry.

Coming to Ami Organics performance for the year, I'm delighted to report that FY '25 marks a landmark year for Ami Organics as we crossed the INR1,000 crore revenue threshold.

This achievement is a testament for to the relentless hard work of every single employee at Ami Organics as well as the steadfast support of our stakeholders, such as our customers, suppliers, shareholders and all other stakeholders who were part of our journey directly or indirectly.

On behalf of the leadership team, I express our deepest appreciation for our stakeholders' contributions to this milestone.

As we cross a big milestone in our journey and enter a new phase of growth, the need for a distinct and future-ready brand identity becomes increasingly evident.

The identity which honours our enlarged vision to build a diversified specialty chemicals company, serving various industries such as pharmaceutical, semiconductor, battery chemicals, petroleum, agrochemicals, cosmetics and preservatives as well as reflects our unwavering commitment to serving humanity in a sustainable manner.

To support this transformation, the management has decided the strategic decision to rename the company from Ami Organics Limited to Acutaas Chemicals Limited.

Looking ahead in FY '26, we anticipate continued growth in our CDMO business bolstered by increasing demand and new CDMO contracts.

On the generic side, as always, we have several molecules within our core generic intermediates portfolio that are expected to benefit from patent expiration in 2025 and 2026, driving further momentum.

May 02, 2025 Additionally, our electrolyte additives business is scheduled to commence production from new brownfield plant at Jhagadia site in the second half of FY '26, with other business segments poised for steady advancement.

Based on these factors, in FY '26, we are confident in delivering 25% revenue growth, a target we have constantly achieved for the past 15 years.

To conclude, I reaffirm our commitment to delivering sustainable growth and value for all stakeholders as we navigate the opportunities and challenges ahead.

Now I will hand over the floor to our Vice President of Strategy, Abhishek Patel, for further business updates.

Over to you, Abhishek.

Abhishek Patel

Thank you, Naresh Bhai.

Good afternoon, everyone.

Let me provide further insight into our business performance, starting with the Pharmaceutical Intermediates.

This segment delivered revenue of INR273 crores in Q4 FY '25, which is a strong growth of around 44% Y-o-Y.

For the full year, Pharma Intermediates business delivered revenue of INR854 crores, which is stellar 50% growth Y-o-Y.

CDMO business was a key growth driver for this business, whereas Pharma Intermediates business continues steady growth momentum.

Moving on to Specialty Chemicals business.

This segment reported flattish revenue of INR36 crores during the quarter.

For the full year, the revenue were INR153 crores, which is a 2% growth Y-o-Y.

While the overall business looked flattish for the year, this was purely driven by the degrowth in BFC business, which was offset by growth in commodity chemical business.

I would like to highlight that commodity chemical business saw strong volume growth of more than 25% during FY '25.

On a capital expenditure side, capex for this financial year stood at INR195 crores, primarily allocated to Ankleshwar site as well as solar and electrolyte additive projects.

Let me give you further updates on the capex.

Starting with Ankleshwar site, the capex work is almost completed.

And I believe during the current quarter, we will capitalize the remaining block, i.e. block 1.

On the solar side, I'm delighted to share a successful commissioning of 10.8 megawatt solar plant.

A newly commissioned solar plant is projected to deliver substantial annual cost savings by meeting most of the electricity requirement of our company's Ankleshwar and Jhagadia units in Gujarat.

In addition to 10.8 megawatt power plant, we are actively developing another 5 megawatts.

This project is expected to complete in near term, which will fulfil electricity need of Sachin unit, Gujarat.

The capex for the full upcoming year, include spillover capex of electrolyte additive business, along with maintenance capex and new pilot plant facility at Sachin Surat.

The pilot plant will help us expedite scaling up of new products as well as manufacturing of high potent chemicals and the new products under CRAM's model.

Overall capex for the upcoming year is expected to be around INR200 crores.

And we have sufficient cash on hand to fund this capex through QIP proceeds and internal accruals of FY '25.

AMI ORGANICS LIMITED · MODERATOR:

May 02, 2025 Before I conclude, I want to reaffirm our confidence in delivering 25% revenue growth in FY '26, a milestone we have consistently achieved for the past 15 years.

On the margin front, we are committed to deliver further improvements in the margin in FY '26.

I also want to highlight a key trend driven by our business cycle.

Q1 is typically our weakest quarter with revenue steadily increasing sequentially until Q4, which is always the strongest quarter.

This pattern results in H1 contributing around 40% of the total top line, while H2 accounts for around 60% of the total year revenue.

As a result, H1 may appear softer and this will reflect in our margin with a lower margin in Q1 and Q2 due to lower top line.

With that, I will hand over our floor to our CFO, Mr. Bhavin Shah, for his financial update.

Over to you, Bhavin Bhai.

May 02, 2025

Moderator · Conference Operator

Thank you.

The next question is from the line of Rikin Shah from the Boring AMC.

Please go ahead.

Rikin Shah

Congratulations on a very strong quarter, sir.

My question is pertaining the Ankleshwar unit.

So I understand Block 1 is being used for our marquee customer in CDMO.

But for Block 2 and 3, have we decided how it would be used?

Like would it be for a specific product?

Or would it depend on the multiple products that we have?

Moderator · Conference Operator

Thank you.

The next question is from the line of Jason Soans from IDBI Capital.

Please go ahead.

Jason Soans

Thank you so much for taking my question.

Congrats on a splendid performance in this quarter.

Now sir, just highlighting from a previous participant's question also, CDMO pipeline definitely looks strong for us in terms of Darolutamide or other sales.

And I remember that you are not giving any API-specific commentary for confidentiality reason, so I understand that.

Sir, but just in a directional sense, if possible, could you give some light on how is the pipeline looking in terms of -- at least in terms of therapeutic areas, how is the pipeline looking there on that side, especially with a lot of the tariff things coming on China as well.

So how is the demand looking after this whole tariff thing and this uncertainty?

So just at least some light in terms of therapeutic areas, if you could give in terms of the CDMO pipeline?

AMI ORGANICS LIMITED · MODERATOR:

May 02, 2025 So this is the two difference between the therapeutic area as well as the generic segment.

In the CMO/CDMO, we have a strong pipeline, number of molecules, I can't disclose over here.

But we have a lot of molecules in clinical trials coming and we are working with several innovators worldwide.

And in generic segments, as I've given my commentary that we have several molecules coming in '25-'26 patent expiry.

So they are now picking up very well.

And there, that will be also a growth driver for our generic business in upcoming couple of years.

Jason Soans

Sure, sir.

So Block 1 and Block 2 in Ankleshwar should be seeing ramp up -- good ramp-up in FY '26 as well?

AMI ORGANICS LIMITED · MODERATOR:

May 02, 2025

Moderator · Conference Operator

The next question is from the line of Krishanchandra Parwani from JM Financial Institutional Securities Limited.

Krishan Parwani

Congratulations on a very strong set of numbers.

Just 2 questions from my side.

Firstly, I think, Abhishek Bhai, you highlighted that our EBITDA margin could be soft in FY '26 likely due to seasonality.

But on a full year basis, will our EBITDA margin be higher than, let's say, 23% reported in FY '25?

AMI ORGANICS LIMITED · MODERATOR:

May 02, 2025

Moderator · Conference Operator

Thank you.

The next question is from the line of Dhara from ValueQuest.

Please proceed.

Dhara Ganatra

Sir, if I may have the missed the margin that you have provided for the Pharma Intermediates and the Specialty Chemicals, if you could please repeat?

Moderator · Conference Operator

The next question is from the line of Siddharth Purohit from InvesQ Investment Advisors Private Limited.

Siddharth Purohit

Yes.

Sir, if you can give some clarity what would be the overall market size of the anticancer intermediate that we are supplying?

And is the market big enough for other players to start supplying to -- like now for the same intermediate that is used Nubeqa for basically?

Moderator · Conference Operator

Thank you.

The next question is from the line of Jash from Dalal & Broacha.

Please go ahead.

Jash

Sir, if you could mention the CDMO sales for the year.

AMI ORGANICS LIMITED · MODERATOR:

May 02, 2025

Moderator · Conference Operator

The next question is from the line of Jason Soans from IDBI Capital.

Jason Soans

Just wanted my last question to be answered only.

You had mentioned a capex of INR200 crores for '26.

And you mentioned spillover capex for Ankleshwar solar power plant and Sachin pilot plants, just wanted the breakup.

And totally, how much has been invested for Ankleshwar?

Moderator · Conference Operator

Thank you.

The next question is from the line of Dikshant Gupta from Geojit PMS.

Please go ahead.

Dikshant Gupta

I would ask what are the -- expected from the solar -- every year, how much can we save?

AMI ORGANICS LIMITED · MODERATOR:

May 02, 2025

Dikshant Gupta

Okay.

And even though the growth on Pharma Intermediates has been tremendous, but the growth in the Specialty segment has been flattish.

So is it because of the international geopolitical tensions?

Or have there been other reasons for it?

Moderator · Conference Operator

The next question is from the line of Akshay from AK Investment.

Please proceed.

Akshay

Sir, my first question is on the capacity utilization.

So what has been the capacity utilization at the end of FY '25?

And what is the peak revenue capability from all our plants?

AMI ORGANICS LIMITED · MODERATOR:

May 02, 2025

Akshay Kaila

Okay.

Just wanted to understand that what is the share of CDMO in Advanced Intermediate space.

Moderator · Conference Operator

The next question is from the line of Abhigyan Srivastav from Marcellus Investment Manager.

Abhigyan Srivastav

Congratulations on the great set of numbers.

I have 2 questions.

My first question is in the 25% revenue growth that you are projecting for FY '26, what is the price assumption that you're taking?

Are you taking prevailing prices?

Or are you considering an improvement in the overall prices?

Moderator · Conference Operator

The next question is from the line of Dhara from ValueQuest.

Dhara

Sir, how much of the INR170 crore capex that you're doing for the additives project, how much has been incurred so far?

Moderator · Conference Operator

The next question is from the line of Ajay Surya from Niveshaay.

AMI ORGANICS LIMITED · MODERATOR:

May 02, 2025

Ajay Surya

Congratulations on the performance.

Sir, my question is more on the macro side.

Sir, if we look currently at the ongoing tariff situation and on the pharma front, U.S.A. being aggressive to manufacture themselves though we are part of the supply chain, supplying API intermediates.

And given our strong guidance, what risk do we foresee.

And if you can highlight them across the segments of CDMO because even our -- the API intermediates which we sell is being consumed though by the European customer, but the end market for them again is U.S.A., a significant market from them.

So what risk do we foresee?

And if you can highlight them across segments of CDMO, the API intermediate and the Specialty Chemicals business?

Moderator · Conference Operator

Thank you.

The next question is from the line of Maitri Shah from Sapphire Capital.

AMI ORGANICS LIMITED · MODERATOR:

May 02, 2025

Maitri Shah

Congratulations on a great result.

I just have one question.

So on the Specialty Chemicals side, currently, our margins are around 14.7%, and we see a ramping up from the semiconductor business and also from the second half, we will see a ramp-up from the electrolyte business.

So do we see the margins scaling up from here or they will remain in this range of 14% to 15%?

Moderator · Conference Operator

The next question is from the line of Akshay from AK Investment.

Akshay

Sir, my question has been answered.

Moderator · Conference Operator

The next question is from the line of Sujeet Shah from SK Enterprise.

Sujeet Shah

Congratulations for a good set of numbers.

And my question is, what are your revenue and margin target for next 2 to 3 years?

Moderator · Conference Operator

Thank you.

The next question is from the line of Sai Kumar from individual investment.

Please proceed

Sai Kumar

Congratulations on a great set of numbers.

So my question is on the electrolyte salts.

So in the past, you said like you were discussing that there were discussions going on for an investment of INR300 crores.

So -- I mean in the past, you had paused it.

So any changes or something, any development going on that side?

AMI ORGANICS LIMITED · MODERATOR:

May 02, 2025

Moderator · Conference Operator

As there are no further questions, I would now like to hand the conference over to management for closing comments.

Thank you.

On behalf of JM Financial Institutional Securities Limited, that concludes this conference.

Thank you for joining us, and you may now disconnect your lines.

This document has been edited for readability purposes.

Questions and answers

Bhavin Shah

Thank you, Abhishek Bhai.

I would like to briefly highlight the key performance metrics for the quarter before we open the floor for questions.

I will start with the quarterly performance.

Revenue from the operations for the quarter reached to INR308.5 crores, representing 37.1% growth and Y-o-Y 12.2% Q-o-Q.

Gross profit for the quarter was INR146 crores, reflecting 62.3% increase compared to the same period last year.

The gross margin expanded by 734 basis points Y-o-Y and 108 basis points sequentially to 47.3%.

Gross margin was driven by better product mix.

EBITDA for the quarter was INR85 crores, which was almost double when compared to same period last year.

EBITDA margins were at 27.5%, up 835 basis points Y-o-Y and 257 basis points Q-o-Q.

EBITDA margin was driven by expansion in gross margin as well as operating leverage.

PAT for the quarter was INR62.7 crores, which grew almost 2.5x compared to the PAT of INR25.7 crores in Q4 FY '24.

PAT margin for the quarter were 20.3%, which saw an expansion of 892 basis points Y-o-Y and 380 basis points Q-o-Q.

Moving to the performance for FY '25.

Revenue from the operation for FY '25 crossed INR1,006.9 crore, representing a growth of 40.3% year-over-year.

EBITDA for the FY '25 was INR232.1 crores, up 80.6% Y-o-Y.

PAT for FY '25 was at INR160.4 crores, which was almost double when compared to the adjusted PAT for the same period last year.

Moving on to balance sheet items.

Net cash and cash equivalents were at INR249 crores.

I'm happy to share that even with robust growth, we are able to control our working capital, which was 114 days during FY '25 as against 116 days in FY '24.

This was driven by improved inventory days and stable receivable days.

Better working capital management led to strong generation of cash flow from operations of INR118 crores, which was around 51% of the EBITDA for the FY '25.

With that, I request moderator to open the floor for questions.

Thank you.

Moderator · Conference Operator

Thank you.

We will now begin the question and answer session.

The first question is from the line of Sudarshan Padmanabhan from ASK MD PMS.

Please proceed.

AMI ORGANICS LIMITED · MODERATOR:

May 02, 2025

Sudarshan Padmanabhan

Sir, my question is, this year has been very strong on the CDMO side, the pharma side, which has driven the growth.

Going forward, I mean, we are very excited about this business.

One, on the CDMO side, if you can give some color on the number of products in the late stage which can hit the commercial?

And outside the pharmaceutical side, on the chemicals because we have a fairly exciting opportunity on the semiconductor, how do we see the scale up there?

I would like to understand the opportunities on the CDMO side, how much of molecules are there in the late stage, which can go to commercial and that will drive the growth in the next couple of years.

And outside the CDMO side, specifically on the chemical side, we have exciting opportunities on the semiconductor space with Baba Fine Chem.

How do we see the scale-up happening on that side?

Because that has not contributed as much as what we expect this year?